On July 16, France's regulatory body, l'Autorité Nationale des Jeux (ANJ), directed internet service providers to block access to Polymarket, a prominent prediction market platform. The ANJ stated that the site promotes illegal gambling services that attract a significant audience, reporting 578,751 visits and 205,057 unique visitors in June alone.
This order followed extensive correspondence and scrutiny from the ANJ. The regulator began monitoring Adventure One QSS Inc., the company operating Polymarket, back in November 2024, when it concluded that the platform operated as an unauthorized gambling service.
Following a formal notice, Polymarket attempted to geoblock financial transactions from within French territory, but the ANJ noted that this measure was easily circumvented. In February of this year, the authority re-emphasized that prediction markets are illegal in France, warning that these platforms exhibit addictive characteristics akin to regulated gambling, but without any of the protections found in the legal marketplace.
Concerns over the integrity of bets on the platform escalated the situation. Some wagers concerning weather forecasts raised suspicions of manipulation, prompting the Paris Public Prosecutor’s Office to launch an investigation on May 4. This investigation, handled by France’s Office for Combating Cybercrime, revealed that Polymarket lacked a robust know-your-customer system to verify user identities, raising serious red flags regarding operational transparency.
The ANJ deemed the site unregulated after observing that its homepage displayed real-time odds, which, in their view, constituted the promotion of unauthorized gambling, punishable by fines of up to €100,000. As part of its authority, the ANJ has already blocked 1,290 URLs in 2025 alone.
France is not isolated in its approach. According to the ANJ, regulatory bodies in numerous European countries—such as Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic—have taken similar steps to restrict or block prediction markets. A query from iGB in March suggested that European gambling regulators would uniformly categorize these platforms as unlicensed betting activities. This landscape shifted when Europe’s financial regulator entered the conversation, altering the regulatory dynamics.
On July 3, the European Securities and Markets Authority (ESMA) reminded market firms of their obligations to evaluate new products under existing regulations. The authority's statement indicated that event contracts, which yield binary payouts based on yes-or-no questions, could fall under the classification of financial instruments. Thus, these contracts would be governed by national prohibitions against marketing, distributing, or selling binary options to retail clients, a ban that has been enforced since 2018. Running such contracts in the EU, according to ESMA, necessitates authorization as an investment firm, even if clients are not classified as retail.
Wulf Hambach, a partner at Hambach & Hambach law firm, explained that ESMA's definition includes questions linked to underlyings listed in specific regulatory categories, such as interest rates, currencies, commodities, and inflation rates, thereby categorizing contracts dealing with these elements as derivatives.
Ismail Vali, founder and former CEO of Yield Sec and now president of Gaming Compliance International, highlighted that this regulatory clarification signifies a shift away from the broad classification of prediction markets as innovative trading platforms. He noted that a contract questioning whether Bitcoin will exceed a certain value resembles a binary financial product more than a gambling innovation.
Vali believes the ESMA statement will prompt regulatory actions rather than stagnation, as it reinforces the application of existing rules. He highlighted that adherence to these regulations often triggers heightened enforcement as regulators feel equipped to act without waiting for new legislation.
Hambach concurred, suggesting that ESMA's clarification provides local authorities a straightforward basis for enforcement. Given that the ban on binary options has been established since 2018, national regulators are poised to move quickly.
ESMA has clarified that commercial terminology is unimportant; only the legal and economic characteristics of a product matter. Vali summed up this principle, stating that if a product acts as a financial instrument, it cannot escape regulation by labeling itself as a prediction market. Conversely, if it functions as gambling, it should not evade gambling regulations by presenting itself as a financial product.
The EU’s upcoming crypto regulations also do not provide a loophole. Any tokenized contracts that meet the MiFID II financial instrument definition will fall outside the new Markets in Crypto-Assets (MiCA) framework, and operators may have to obtain MiCA authorization if their products qualify as crypto-asset services once the transitional period ends this month.
On July 13, ten days after ESMA's statement, Gibraltar took a different route by introducing its own regulations under its Gambling Act 2025, establishing prediction markets as a distinct category requiring licensing. Minister Nigel Feetham proclaimed this framework as the first of its kind globally.
Gibraltar's 24-page regulations mandate that each event contract be certified by the Gambling Authority and require operators to prevent market manipulation and insider trading while outlawing contracts relating to criminal acts, death, terrorism, or war. Already, ADI Predictstreet and WagerWire from the United States have obtained licenses under these new regulations.
However, Hambach cautioned that ESMA's guidance shapes what licenses from Gibraltar or Malta can accomplish within Europe. Contracts linked to underlying assets specified under MiFID II are treated as derivatives subject to the retail binary-options ban, rendering the outcome of gambling or MiCA licenses somewhat moot. Without financial contracts, what remains may fall primarily within the realm of sports betting, which raises the concern that a sports-only prediction market may resemble a traditional betting exchange, rather than an innovative financial model.
The stark contrast between the U.S. and European regulatory environments is evident. In the U.S., operators can classify event contracts as futures or swaps under the Commodity Exchange Act, allowing them to operate under federal law that supersedes state gambling regulations. In contrast, the financial classification in the EU invokes a ban on retail sales.
Vali observed that this regulatory disparity gives operators in the U.S. a competitive edge, allowing them to extract value from both regulated and unregulated markets without sufficient consumer protections or tax obligations. He argued that the strategy of regulatory arbitrage is unsustainable and emphasized that the guiding purpose of regulation is not just to supervise regulated entities but to govern the overall market.
According to Hambach, global operators must either adapt to local regulations by narrowing their product offerings and securing licenses or avoid jurisdictions where they cannot comply. With the ANJ's blocking efforts, ESMA's reminders, and Gibraltar's regulatory framework, the era of unrestricted prediction markets is swiftly coming to an end. The essential question facing regulators, as Vali posits, will focus on whether prediction markets genuinely provide improved outcomes for consumer protection, integrity, tax collection, and crime prevention. If they fail to do so, regulators are likely to view them not as innovative enterprises, but as avenues for regulatory and tax evasion.
